2018’s investors are looking far beyond the traditional savings accounts, shares and unit trusts of past generations. Today, amateurs are happily dipping their toes into areas previously occupied only by professionals, or perhaps a few Heads of State. Forex trading is one example, but an even bigger surge of interest has been seen in everyday savers looking to invest in precious metals.
When you lift the lid on the treasure box, you see some compelling reasons to join them:
1) Gold maintains its value
There is a reason that all those Kings and wealthy merchants from the fairy tales held their fortunes in gold. Throughout the centuries, it has been shown to constantly maintain its value, and gradually appreciate over time. Whatever else happens in the world, if you have a stash of gold bars like the ones here stashed away in a vault, you know that your fortune is safe!
2) Hedging against inflation
When prices go up, so does the value of gold. Just take a look at the last 50 years or so as a case in point. In the years that have seen the highest rates of inflation, the stock market has typically tanked, while the price of gold has gone through the roof.
3) The crisis commodity
These are uncertain times, and that is part of the reason for the interest in gold. It is strange that even in the modern era of high technology and even virtual currencies like Bitcoin, when world tensions escalate, there is an almost instinctive urge to convert our wealth into the safety of something tangible. Again, history has shown that whatever psychological factors are driving this behavior, it is a course of action that you cannot argue with. Throughout the most disruptive world events, gold has been the one investment you can always rely on.
4) Supply and demand
It is one of the simplest economic principles of them all. Low supply and high demand means rising prices. Production has remained steady over the past three years, but demand is escalating. Gold is increasingly important in IT applications due to its unique chemical qualities. Ironically, the fact that investors are increasingly interested in gold is also increasing demand – a classic example of a self-fulfilling prophesy!
Throughout this discussion, we have mentioned gold as an important component of your investment portfolio, and that is, perhaps, the most important thing to understand of all. Nobody is suggesting converting all your wealth into gold bullion and burying it in the garden. However, the fact is that gold generally has a negative correlation to conventional investments such as stocks and shares.
The biggest takeaway, therefore, needs to be that you should get the right balance in your investment portfolio, and ensure that gold, and potentially other precious metals, are given the chance to play their role in protecting your overall wealth from those events that can have a cataclysmic effect on stocks, share and other market-based investments.